(REUTERS) - The euro rose on Monday on relief that Greece's parliament had approved an austerity bill, taking Athens closer to securing much-needed bailout funds, though with obstacles still to be cleared to avoid a hard default, investors remained skeptical.
A Greek agreement for austerity was always going to be short term positive for the euro, said Paul Robson, currency strategist at RBS.
Amid widespread civil unrest Greece passed the bill but Robson expected the euro to be volatile in the run-up to Wednesday's meeting of euro zone finance ministers.
The ministers still require Greece to explain how 325 million euros ($430 million) of this year's total budget cuts will be achieved before they agree to the 130 billion euro bailout.
The euro was up 0.5 percent at $1.3245, in sight of a two-month high of $1.3322 hit last week. That level and the 100-day moving average at $1.3325 were technical resistance, while traders said a large option expiry at $1.3300 was likely to restrict further intra-day gains.
Analysts at Commerzbank said their euro/dollar orderbook model showed a greater density of sell orders at current levels, adding the $1.3090 area was where the balance became more neutral and any downside move may run out of steam there.
Part of the wariness among traders to push the euro higher is uncertainty over whether private creditors will agree to write down the value of their Greek holdings. Doubts persist whether the necessary near 100 percent acceptance can be achieved without triggering a credit default.
Voluntary private sector participation is unlikely to be at the levels the IMF and European authorities are looking for and this is one of the reasons for our bearish view on the euro, said Chris Walker, currency strategist at UBS
Even if a voluntary agreement is reached, a debt swap could take three to four weeks to finalize, leaving a tight deadline before Greece faces a March 20 bond redemption of nearly 15 billion euros.
Germany's finance minister, Wolfgang Schaeuble, said in an interview with German newspaper Welt am Sonntag that Greek promises on austerity measures were no longer good enough because so many vows had been broken.
Still, Greece effectively voting to stay in the euro by passing the bill has provided a short-term relief to investors. Fear of a major banking crisis has also subsided as the European Central Bank is set to provide an unlimited amount of three-year loans for the second time later this month after its first operation in December.
Analysts say these factors have prompted institutional investors to scale back on bearish positions in the euro. But any bounce above $1.35 could see fresh shorts established.
Speculators have been cutting their net euro short positions for the past two weeks, to 140,593 contracts last week from a record 171,347 contracts two weeks previously.
If euro/dollar goes up to $1.35, it would be a good level to short it, said Stuart Frost, head of absolute returns and currency at fund manager RWC Partners. Once it gets down to $1.30 people will again buy it. So it's a range play.
He said short-term opportunities lay in selling the euro against growth-linked currencies like the Australian and New Zealand dollars.
Both currencies outperformed the euro and rose amid improved sentiment for risk assets after Greece's vote. The Australian dollar was up 0.9 percent at $1.0750, though it was off a two-month high of $1.0845 marked last week.
The New Zealand dollar rose 1.2 percent to $0.8360.